The former head of the Nigerian Stock Exchange (NSE), Ndi Okereke-Onyuike, on Tuesday refuted allegations that she superintended over abusive processes that led to the crash of the capital market.
Instead, she said, poor regulation amid other violations by the regulatory agencies, the Security and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN), are to blame for the downfall of a troubled market that was already shaken by the 2009 global economic crisis.
She said the capital market suffered more from reckless dealings by the banks which drew no sanctions from the regulatory bodies adding that the unguarded pronouncements by the two bodies, especially the CBN, was the last straw that tore the market apart.
She said some of the statements made by the head of the regulatory agencies were “wild” and “irresponsible.” The CBN governor, Sanusi Lamido Sanusi, has been reported as having described the capital market as kalu kalu, a Hausa word implying a casino.
The former NSE boss, who promised to tell no lie during the hearings since she had “sworn with the Bible”, said both agencies failed to stipulate guidelines for margins loans which many banks abused leading to the near collapse of the capital market.
“It is the banks that brought all the problems,” Ms. Okereke-Onyuike said at a dramatic House of Representatives hearing that dragged on for several hours.
“The indiscriminate granting of margin loans by the banks to all manners of investors and market operators caused the market bubble.
“Margin loans by themselves are not bad, because they help to create more liquidity in the market, globally. However, in the case of Nigeria, the banks gave out these loans indiscriminately, and in most cases insisted that such margin loans were used to purchase their own shares”.
Ms. Okereke-Onyuike accused SEC of sourcing operational funds from the Stock exchange that was supposed to be regulated by the SEC.
“SEC was collecting 0.3% of shareholdings from NSE,” she told lawmakers.
Mrs. Okereke-Onyuike gave a forceful testimony before the House capital market probe, denying long-standing allegations that SEC has repeatedly cited as having informed its decision to fire the former NSE boss.
The Director General of the regulatory commission, Arunma Oteh, had told the lawmakers on Monday that Mrs. Okereke-Onyuike for years led an exchange that permitted the stealing of investors’ funds, falsification of records, and insider dealings.
Mrs. Okereke-Onyuike was removed in August 2010 after the SEC boss took over. The former NSE head said she was wrongfully removed, harassed by police officers and denied her severance benefits since 2010 and brought her complaints before the courts.
In 2010, a federal high court backed her complaints and ordered that Ms. Okereke-Onyuike be reinstated and paid a compensation of N500 million.
Ms. Okereke-Onyuike claimed that the SEC did not do as the court ruled but said she chose not to press her reinstatement since she was on the verge of retirement a few months before she was removed.
On allegations that she misused money at the exchange on frivolous purchases such as Rolex watches and a yacht, the former NSE boss said whatever expenditure made were from money which belonged to a private company.
“Stock exchange is a private company. Expenditures and decisions on how to spend its fees, so long as is approved by the management and council, is a foregone conclusion,” she told the lawmakers.
“A government body like SEC has no power to determine how a private company spends its money or who leads the company,” she added.
She also denied charges that the NSE shared money to the council members in 2009 as alleged by the SEC boss, Ms. Oteh.
“Stock exchange never shared money to management members but they were given money to go on educational tour. Nobody shared anything. Even if it did, it is nobody’s business.”
In speeches and cross-examinations that spanned hours and at times became dramatic. Mrs. Okereke-Onyuike staged a vigorous defence of her stewardship intermittently making taunting allusions directed at Ms. Oteh.
“While some people are bragging about going to Harvard Business School to learn, I go there to teach. While some people are bragging about making first class from University of Nigeria, Nsukka, I go there to teach. I am a real professor, not honorary,” Mrs. Okereke-Onyuike, a professor on capital markets, said at a point, referring to Ms. Oteh’s inclination to repeatedly flaunt her credentials to the lawmakers as a first class graduate who worked abroad for years.
Ms. Oteh on Tuesday returned to the path of confrontation with the lawmakers after refusing to turn up for the continuation of the hearings. She sent in a letter informing the committee that she chose to attend the National Economic Management Team, chaired by President Goodluck Jonathan instead.
The SEC’s boss said she had attended the hearings repeatedly and was not allowed to speak, and announced she would prefer to respond to further questions through letters.
The Chairman of the committee, Ibrahim El-Sudi, called the letter “arrogant and disrespectful” and threatened to order Ms. Oteh’s arrest if she fails to appear on Wednesday.